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Tuesday, 30 December 14
INDIA INC TO BENEFIT AS IMPORTED COAL PRICES SET TO FALL - RAHUL PRITHIANI
The Hindu: India‘s coal import volumes are set to rise by over 30 per cent over the next two years to 214 million tonnes in 2015-16, as domestic supply falls short of surging demand.
However, globally, the situation is just the reverse. Severe oversupply with few takers will drag down prices of both thermal and coking coal by about 25 per cent. This will slash fuel costs and support the profitability of India Inc. Lower prices will also cap India’s coal import bill, unlike a 17 per cent annual growth witnessed over the last five years.
Supply soars
Miners in major coal exporting countries like Indonesia and Australia have significantly ramped up investments over the past five years, anticipating steady off take from major importers such as India and China. For example, coal mining investments in Australia are estimated to have doubled to about $50 billion over 2009 to 2013 from about $25 billion over 2003 to 2008. Moreover, domestic coal supply in China is also likely to increase as its railway capacity for hauling coal expands by nearly one-third to three billion tonne by 2020. This will ease transportation bottlenecks in that country.
Thus, while coal supplies will grow, there are likely to be few takers.
Even as miners stack up supplies, off take by major consumers including China, the U.S. and Europe is set to post a muted rise. Weak GDP growth, a gradual shift to cleaner fuels and rising energy efficiencies will curb demand.
The most telling fact is that China, the world’s largest importer of coal, has placed import curbs, will further restrict demand. Over the last three months, it has banned imports of low-grade coal, while imposing import duties on both thermal (six per cent) and coking coal (three per cent). Global economic weakness and China’s measures to move away from an investment-led growth model will also halve the growth in coking coal importsover the next five years.
Thus, oversupply in the global coal market, along with weakening currencies in exporting countries, is expected to drag down thermal and coking coal prices by 25 per cent approximately over the next two years to $65 per tonne and $115 per tonne by 2015, respectively.
Advantage India
For India, which has scarce domestic energy resources, the above changing dynamics certainly bode well. India’s coal import volumes are expected to rise by 33 per cent over the next two years, as domestic production lags demand. In such a scenario, falling global coal prices will help India Inc.
In the power sector, projects running on imported coal — including that of Tata Power, Adani Power and Essar Power — will benefit the most from sliding coal prices. These projects have incurred huge losses since 2012-13 when Indonesian coal prices almost doubled following a change in regulations. However, with imported coal prices plummeting, returns of such projects are expected to improve. As per our analysis, for a project operating on imported coal, even a one per cent fall in fuel costs will drive up equity returns by 25 basis points.
Even power projects based on domestic coal will benefit, as they can increase blending of imported coal and boost utilisation rates. In particular, plant-load factors (PLFs) of post-2009 power projects, which languished at just 51 per cent in 2013-14, will improve gradually.
Similarly, input costs for cement and metal manufacturers will decline, supporting their profitability. For cement players, reliance on imported coal has gradually risen — reaching 30-35 per cent of total coal consumption in 2013-14, as the power sector was prioritised for domestic coal supply. As demand growth slowed and operating costs rose, the industry’s operating margins fell to 15 per cent in 2013-14 from 28 per cent in 2009-10. Therefore, falling imported coal prices, will reduce cost pressures for the sector through lower fuel costs, which will decline by 3-4 per cent in 2014-15. In particular, cement plants, which have higher reliance on coal imports, will witness a much sharper reduction in fuel costs, as imported coal prices are set to fall by 15-17 per cent in 2014-15.
The decline in global coking coal prices is good news even for steelmakers beset by muted demand and global overcapacity. With good-quality domestic supply being scarce, Indian steelmakers import nearly 70 per cent of their coking coal requirements and coal accounts for 30 per cent of their manufacturing costs. Thus, a sharp decline in global coking coal prices will drag down operating costs by 6-8 per cent in 2014-15 and thereby support profitability.
There are also some macroeconomic advantages. Most importantly, despite the rise in coal import (volumes), the value (or the import bill) will only rise marginally at a CAGR of one per cent over the next two years. This contrasts sharply vis-à-vis the past 5 years, when the bill had risen at a 17 per cent CAGR to Rs.888 billion (approximately US$ 13,950,428,156).
The author is Director, CRISIL.
Source: The Hindu
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Tuesday, 23 December 14
SHIPOWNERS ARE FINALIZING MORE DEALS AS YEAR END COMES CLOSER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS WORLDWIDE
With the 2014 year just a few days before waving goodbye, shipowners are looking to close their pending deals in both the newbuilding and S&P m ...
Monday, 22 December 14
Q2'15 CFR SOUTH CHINA COAL SWAP CLOSED $ 0.30 LOWER THAN Q1'15 CLOSING
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased by US$ 3.67 (-5.81%) month over month and US$ 0.35 (-0.58%) ...
Monday, 22 December 14
API 5 FOB NEWCASTLE COAL SWAPS ARE HEADING SOUTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.71 per MT (-3.24%) and closed at US$ 51.02 on 19 December month ...
Sunday, 21 December 14
PANAMAX COAL FREIGHT FROM INDONESIA TO INDIA FALLS FURTHER
COALspot.com: The BDI continued its fall as cape index lost heavily week on week.
The BDI was down 6.95 percent week over week and closed at 8 ...
Friday, 19 December 14
HOW WILL LOWER BUNKER PRICES AFFECT THE SUBSTANTIAL OVERCAPACITY IN DRY BULK MARKET? - BIMCO
As bunker fuel costs have come down from USD 600 per tonnes to USD 330 per tonnes in the past 6 months, much talk about increased ship speed have s ...
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- Power Finance Corporation Ltd., India
- Sakthi Sugars Limited - India
- Grasim Industreis Ltd - India
- Petron Corporation, Philippines
- Minerals Council of Australia
- Romanian Commodities Exchange
- GMR Energy Limited - India
- Toyota Tsusho Corporation, Japan
- Central Java Power - Indonesia
- Thai Mozambique Logistica
- Antam Resourcindo - Indonesia
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Interocean Group of Companies - India
- White Energy Company Limited
- Bangladesh Power Developement Board
- Iligan Light & Power Inc, Philippines
- Latin American Coal - Colombia
- Aditya Birla Group - India
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- Electricity Authority, New Zealand
- Mjunction Services Limited - India
- Posco Energy - South Korea
- Miang Besar Coal Terminal - Indonesia
- Cement Manufacturers Association - India
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Globalindo Alam Lestari - Indonesia
- Wilmar Investment Holdings
- Malabar Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Ministry of Finance - Indonesia
- Binh Thuan Hamico - Vietnam
- London Commodity Brokers - England
- Sree Jayajothi Cements Limited - India
- Marubeni Corporation - India
- Rio Tinto Coal - Australia
- SMC Global Power, Philippines
- Wood Mackenzie - Singapore
- Port Waratah Coal Services - Australia
- Singapore Mercantile Exchange
- Eastern Coal Council - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Karaikal Port Pvt Ltd - India
- McConnell Dowell - Australia
- Kohat Cement Company Ltd. - Pakistan
- Pendopo Energi Batubara - Indonesia
- IEA Clean Coal Centre - UK
- Energy Link Ltd, New Zealand
- Standard Chartered Bank - UAE
- Bukit Baiduri Energy - Indonesia
- Agrawal Coal Company - India
- PTC India Limited - India
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- Bhoruka Overseas - Indonesia
- Vedanta Resources Plc - India
- Riau Bara Harum - Indonesia
- GAC Shipping (India) Pvt Ltd
- Videocon Industries ltd - India
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- Chamber of Mines of South Africa
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- Bhatia International Limited - India
- Bukit Makmur.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- The University of Queensland
- ASAPP Information Group - India
- Electricity Generating Authority of Thailand
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Medco Energi Mining Internasional
- Indian Energy Exchange, India
- Holcim Trading Pte Ltd - Singapore
- Australian Commodity Traders Exchange
- Bhushan Steel Limited - India
- Alfred C Toepfer International GmbH - Germany
- Indian Oil Corporation Limited
- Formosa Plastics Group - Taiwan
- Barasentosa Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- GVK Power & Infra Limited - India
- Ministry of Mines - Canada
- New Zealand Coal & Carbon
- Renaissance Capital - South Africa
- Manunggal Multi Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- ICICI Bank Limited - India
- PNOC Exploration Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Indo Tambangraya Megah - Indonesia
- Anglo American - United Kingdom
- Bharathi Cement Corporation - India
- Salva Resources Pvt Ltd - India
- Indika Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Maheswari Brothers Coal Limited - India
- Commonwealth Bank - Australia
- LBH Netherlands Bv - Netherlands
- Eastern Energy - Thailand
- Mercuria Energy - Indonesia
- Global Business Power Corporation, Philippines
- Ministry of Transport, Egypt
- Sojitz Corporation - Japan
- Merrill Lynch Commodities Europe
- Sarangani Energy Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining and Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- MS Steel International - UAE
- Jorong Barutama Greston.PT - Indonesia
- Price Waterhouse Coopers - Russia
- South Luzon Thermal Energy Corporation
- Directorate General of MIneral and Coal - Indonesia
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Australia Pty. Ltd.
- Sinarmas Energy and Mining - Indonesia
- Borneo Indobara - Indonesia
- Star Paper Mills Limited - India
- Parliament of New Zealand
- Goldman Sachs - Singapore
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- SN Aboitiz Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Oldendorff Carriers - Singapore
- Larsen & Toubro Limited - India
- Asmin Koalindo Tuhup - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Jindal Steel & Power Ltd - India
- Xindia Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Coal and Oil Company - UAE
- Neyveli Lignite Corporation Ltd, - India
- International Coal Ventures Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Metalloyd Limited - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- VISA Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- San Jose City I Power Corp, Philippines
- CIMB Investment Bank - Malaysia
- The State Trading Corporation of India Ltd
- Mintek Dendrill Indonesia
- PowerSource Philippines DevCo
- Tata Chemicals Ltd - India
- Kobexindo Tractors - Indoneisa
- European Bulk Services B.V. - Netherlands
- Samtan Co., Ltd - South Korea
- Siam City Cement PLC, Thailand
- Parry Sugars Refinery, India
- Kideco Jaya Agung - Indonesia
- Heidelberg Cement - Germany
- Coalindo Energy - Indonesia
- Dalmia Cement Bharat India
- SMG Consultants - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- India Bulls Power Limited - India
- Orica Mining Services - Indonesia
- Madhucon Powers Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- Carbofer General Trading SA - India
- Rashtriya Ispat Nigam Limited - India
- Thiess Contractors Indonesia
- Baramulti Group, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Central Electricity Authority - India
- Planning Commission, India
- Semirara Mining Corp, Philippines
- Indonesian Coal Mining Association
- Attock Cement Pakistan Limited
- Sindya Power Generating Company Private Ltd
- Australian Coal Association
- IHS Mccloskey Coal Group - USA
- Jaiprakash Power Ventures ltd
- Indogreen Group - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Africa Commodities Group - South Africa
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Bulk Trading Sa - Switzerland
- OPG Power Generation Pvt Ltd - India
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- The Treasury - Australian Government
- Coastal Gujarat Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Sical Logistics Limited - India
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